Would selling PG&E’s Diablo Canyon nuclear plant be such a bad thing?

6 things to know about the PG&E bankruptcy filing and how it affects you

PG&E is about to go bankrupt. Will the troubled utility keep the lights on as it finds a resolution of the billions of dollars it faces in potential liabilities from the Camp Fire and the wine country wildfires.
Up Next
PG&E is about to go bankrupt. Will the troubled utility keep the lights on as it finds a resolution of the billions of dollars it faces in potential liabilities from the Camp Fire and the wine country wildfires.

PG&E has been the financial backbone of San Luis Obispo County for decades, contributing more in property taxes and payroll than any other private company.

And now that backbone is bankrupt?

To clarify, the company isn’t going under — lights are staying on, literally and figuratively — but it has announced that it plans to file for Chapter 11 reorganization in response to the $30 billion liability if faces from victims of California’s wildfires. (That figure is a moving target; it could be lower now that investigators have ruled PG&E was not responsible for the deadly 2017 Tubbs Fire.)

For San Luis Obispo County, the news comes at a particularly bad time. Already, the community has been dreading the financial hit the region will take when the Diablo Canyon nuclear power plant closes in 2025. Those worries have been compounded by the bankruptcy announcement.

PG&E, though, has been a model of composure. Blair Jones, longtime spokesman for Diablo Canyon, insists it’s business as usual at California’s only remaining nuclear power plant, and dismisses speculation that the plant could be sold. We hope he’s right.

Yet if we’d asked PG&E a year or even six months ago if it planned to file for bankruptcy, we would have gotten similar denials.

The point being: Stuff happens.

Read Next

As a nuclear community, San Luis Obispo County has a special stake in what in happens to the utility, and it’s better to consider all the possibilities today than to be caught unaware five or six years from now.

With that in mind, here are five actions to help us stay on track:

1. Don’t panic

County Supervisor Adam Hill was among the first to sound the alarm about a possible sale of Diablo Canyon. There’s a pattern of it happening in other communities where nuclear power plants are on the verge of closing.

A sale would put another company in charge of the critical task of dismantling the plant (AKA decommissioning).

“Here in our community, trust for how Diablo Canyon Power Plant operates has obviously been well and long established with PG&E — not an outside firm driven by profits to do the job more cheaply than PG&E,“ Hill wrote in a Tribune Viewpoint.

Yet PG&E has limited experience with decommissioning, with the much smaller Humboldt Bay Power Plant just south of Eureka, California.

Other companies have substantially more experience; Holtec International, for example, is decommissioning three U.S. nuclear plants — one in Massachusetts, another in Michigan and one New Jersey.

It also has done some work on the San Onofre Nuclear Generating Station in Southern California.

Unfortunately, that has not gone well. On Aug. 3, a canister loaded with spent radioactive fuel became jammed while being moved into a storage vault, and according to an account on the Nuclear Engineering International website, “narrowly avoided being dropped 18 feet.”

That doesn’t inspire much confidence. Then again, PG&E’s record isn’t stellar, either, what with the San Bruno gas line explosion in 2010 and the California wildfires.

Here’s the point: The biggest concern is that decommissioning be carried out as safely and as expeditiously as possible.

If it turns out that another company is better suited for the job than PG&E, that’s not a cause for panic.

Former state Sen. Sam Blakeslee, who’s been heavily involved in Diablo Canyon safety issues, put it like this: “I don’t see a peril in another entity having responsibility for a project of that scope.”

2. Don’t give PG&E carte blanche

The utility has applied for a $1.6 billion rate increase to cover the cost of decommissioning the plant after it closes. The would add about $2 a month to the average residential customer’s bill.

It’s critically important to have enough money set aside to fully fund decommissioning. So, yes, that means a rate increase.

But PG&E can’t be given a blank check; it must be held accountable for the continued safe operation of the plant in its final years, as well as for decommissioning.

The Alliance for Nuclear Responsibility has raised one red flag: It’s protesting the rate increase on the grounds that PG&E has failed to to collaborate with the California Energy Commission to develop a plan to transfer spent nuclear fuel from storage ponds to dry casks.

This is a big deal. In 2008, Gregory Jaczko, then a board member for the NRC, admitted that “the most clear-cut example of an area where additional safety margins can be gained involves additional efforts to move spent nuclear fuel from pools to dry-cask storage.”

Dry-cask storage is considered safer because it doesn’t require pumps and other equipment to keep the fuel cool. Hardened casks also are a less attractive target for terrorists; it would be easier for terrorists to drain a spent fuel pool than breach a dry cask.

“Rather than reducing the number of spent fuel assemblies stored in the ... pools, PG&E now intends a substantial increase,” the protest filing states.

PG&E says it’s proposed to empty the pools within seven years of the plant’s closure, and has shared that plan with The Alliance for Nuclear Responsibility and the California Energy Commission.

According to Jones, PG&E “looks forward to ongoing discussions of its merits compared to other alternatives.”

OK. But if there is a viable alternative that allows for faster transfer to dry casks, PG&E should be required to follow it.

3. Get moving on economic recovery plan

The bankruptcy has stoked fears that Diablo could close ahead of schedule — one unit is scheduled to close in 2024 and the other in 2025 — and that would mean the economic hit from loss of payroll and tax revenue would arrive sooner than expected.

But guess what? The original closing date isn’t that far removed anyway, and financial planning is already behind schedule.

For example, we were supposed to have two studies assessing the economic impacts of the shutdown.

While we don’t put a lot of faith in studies — and we’ve never seen a need for two separate studies — ratepayers are footing the bill, and deserve something for their money.

But so far, we don’t have even one of the studies.

Why not?

Another thing: To date, there have only been preliminary discussions of how to best use the $10 million in economic development aid coming to various jurisdictions in San Luis Obispo County. That money is locked in by law, so it should not be affected by bankruptcy proceedings.

So why aren’t we more actively engaged in discussions about how the funds should be used?

4. Take another look at Community Choice Energy

PG&E’s bankruptcy announcement is having an unfortunate ripple effect, and renewable energy companies are among those hit.

The credit rating of Topaz Solar Farm, the large solar farm in the Carrizo Plains has been downgraded to junk status.

Topaz, which sells 100 percent of its power to PG&E, is vulnerable because the bankruptcy proceeding would allow PG&E to revoke or renegotiate the contract to get a better price.

On the one hand, PG&E’s financial situation would improve from renegotiated contracts, benefiting ratepayers. But as The New York Times points out, it could hurt renewable energy companies that borrowed money based on higher prices.

There’s also the fear that if Diablo Canyon were to close ahead of schedule, PG&E might not be able to replace that power with renewables — bad news for the environment.

Local agencies aren’t powerless, though. They can start a community choice energy program or join an existing one, which is what the cities of San Luis Obispo and Morro Bay did last year. They are now part of Monterey Bay Community Power, and in 2020, residents of the two cities will have the option to buy carbon-free energy through the MBCP.

San Luis Obispo County considered taking a similar step — but rejected it on a 3-2 vote. At the time, the local Sierra Club chapter called it “the most inexplicable, indefensible and reactionary vote of 2018.”

It’s not too late to reconsider.

5. Nonprofits are losing big money ... can you help?

In 2017, PG&E donated $1 million to nonprofit agencies in San Luis Obispo and Northern Santa Barbara counties. (It’s in the process of compiling the total for 2018.)

With the bankruptcy, PG&E has put a hold on donations, which means agencies that had benefited from PG&E’s corporate giving will need to look elsewhere for support.

Here are some SLO County organizations that received PG&E donations in 2017:

Five Cities Homeless Coalition

Cuesta College Foundation

Honor Flight of the Central Coast

San Luis Obispo Museum of Art

Special Olympics, Southern California Chapter

United Way of SLO County

Food Bank Coalition of SLO County

Gay and Lesbian Alliance of SLO County

Five Cities Diversity Coalition

Avila Beach Community Foundation

Jack’s Helping Hand

Latino Outreach Council

Paso Robles Rotary Services Inc.

SLO Community Foundation

SLO County Office of Education

SLO Law Enforcement Assistance Foundation


Point San Luis Lighthouse Keepers

Transitions Mental Health Association, SLO County

Family Care Network

American Heart Association, SLO County

This has been updated to correct the status of the bankruptcy filing and to include PG&E’s statement on the transfer of spent fuel to dry casks.

Related stories from San Luis Obispo Tribune